Repayment Clauses for Training Costs: What Employers Need to Consider Now

In its final judgment of August 19, 2025 (Case No. 7 SLa 647/24), the Higher Labour Court (LAG) of Cologne continued the strict line of case law regarding the repayment of training costs and established new standards that are highly relevant in practice. Employers should therefore pay close attention to the specific wording of such contractual agreements. Otherwise, they may have no claim to reimbursement of those costs.

When Are Repayment Clauses Invalid?

Individual contractual agreements requiring an employee to contribute to the costs of training financed by the employer if the employee leaves the employment relationship before the expiry of specified periods are generally permissible. However, as pre-formulated contractual provisions, such clauses are subject to review under the German law on standard contract terms pursuant to Sections 305 et seq. of the German Civil Code (BGB).

A repayment clause is invalid if it places the employee at an unreasonable disadvantage, meaning that the employee’s legal interests are impaired without being justified by legitimate and reasonable interests of the employer or offset by equivalent benefits.

If a clause is found to be invalid, it is void in its entirety. In such a case, the employer cannot require the departing employee to repay the training costs.

Overview of the LAG Cologne Judgment (7 SLa 647/24)

A professional fire department hired an employee as a trainee fire officer and financed his 18-month training program. The training agreement initially contained a repayment clause covering the training costs (approximately EUR 16,000) and included a three-year retention period.

The repayment obligation was intended to apply if the employment relationship ended due to either the employee’s resignation or a dismissal based on reasons “for which the employee was responsible.” The agreement also stipulated that participation in the training program would count as working time and that the employee would be released from regular work duties for the duration of the training. During this period, the employee continued to receive remuneration (approximately EUR 72,500). The agreement also provided for repayment of this remuneration if the employment relationship ended for reasons attributable to the employee.

After successfully completing the training, the employee resigned by giving ordinary notice. The employer subsequently demanded repayment of approximately EUR 70,000 on a pro rata basis.

The Higher Labour Court held that both repayment clauses were invalid under Section 307(1) sentence 1 BGB.

Invalidity Due to Ambiguous Wording

The Court considered the phrase “reasons for which the employee is responsible” to be ambiguous. The term may be interpreted in accordance with Section 276 BGB as referring to culpable conduct, i.e. intentional or negligent behavior. Under this interpretation, a resignation caused by circumstances beyond the employee’s control, such as permanent incapacity to work, would not trigger a repayment obligation.

However, the wording could also be interpreted more broadly to include all reasons arising from the employee’s sphere of responsibility or risk, including a resignation due to permanent incapacity to work. Under this interpretation, repayment of the training costs would be required.

Because neither interpretation clearly prevailed, the ambiguity rule of Section 305c(2) BGB applied. As a result, the ambiguity had to be construed against the employer as the party using the standard contract terms, rendering the clause invalid.

Invalidity Due to Repayment of Contractual Remuneration

The Court also held that the repayment obligation relating to remuneration paid during the training period was invalid. The employee had not actually been released from performing work. Rather, participation in the training constituted the contractual work performance expected from a trainee fire officer. In other words, the employee was effectively “working” by attending the training program.

The Court further noted that requiring repayment of approximately two years’ net salary would be financially ruinous for the employee. For this reason as well, the clause was deemed invalid.

Practical Recommendations for Employers

The key requirements established by the case law can be summarized as follows:

• Repayment clauses must differentiate according to the reason for the employee’s departure. A blanket repayment obligation triggered by every employee resignation is not permissible. Cases involving permanent incapacity to work without fault on the part of the employee must be excluded from repayment obligations.
• The retention period must be proportionate to the duration and value of the training provided.
• If participation in the training constitutes the employee’s contractual work performance, remuneration paid during that period cannot subsequently be characterized as “leave pay” subject to repayment.

If a repayment clause is invalid, it cannot be partially preserved through judicial modification. Instead, it becomes void in its entirety. Nor can the employer generally pursue reimbursement claims based on unjust enrichment under Section 812 BGB. Employers should therefore review and, where necessary, update existing and future training cost repayment agreements without delay.